Market's evolution 06 of June to 10 of June 2016

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Monday, 13 of June 2016

Market's evolution 06 of June to 10 of June 2016

The last week was a transition week awaiting important fronts. There were no significant changes in financial markets since these are awaiting the Fed’s meeting to take place the next 15th of June and Referendum of Brexit the 23rd of June.

The European equity markets ended the week in red after suffering falls of up to -3,50% in the IBEX 35 (now around the 8.490 after losing the support levels located in the 8.500), followed by the Eurostoxx50 with cuts of -2,90%, and maintaining the support levels at 2.860.

However, the main attraction during the week was the German Bund after hitting new lows. Statements made by the OECD warned of the need for further monetary policy measures as price levels didn’t seem to rebound, pointing to rate cuts. This would have led to anticipate higher rate falls, which exerted downward pressure on the government fixed income.

As for macroeconomic date is concerned, it pleasantly surprised, showing improvements in levels of consumer confidence and rises in growth levels (GDP Q1 +0,6% actual vs the +0,5% expected). Similarly, production levels seemed to gain momentum again (+0,8% in Germany and +1,2% in France).

Regarding the United States, the week in the markets was more positive. The selective S&P500 closed the week flat at 2.096 levels (-0,15%), while the Nasdaq Composite did around the 4.894 after suffering cuts -1%.

Apparently, most of the Fed members appeared to agree that it is not the best time for a rate hike, however, Janet Yellen showed an optimistic sight about the US economic developments without actually rule a move the next Wednesday. And although no changes were expected in the markets, we must not lose sight to the improvement in labor costs (with a final rally +4,5 in the Q1 of 2016).

From Asia, despite the upward revision of growth levels (up to +1,9% from the previous figure of +1,7%) it seems to be improving, and already discounting greater easing measures from the BOJ. The Japanese selective closed the week flat (-0,25%), while the yen was the biggest winner of the week. After the EUR/USD broke support levels, it stood at levels of the 120 EUR/USD and this morning is trading traded at levels of the 119 EUR/JPY acting as a safe asset.

As for the commodity markets, gold ounce starred new blips (+2,40%) at the high levels of uncertainty. Similarly, the barrel of Brent maintained levels of 50 USD/Brent.